Real estate and construction industry can no longer ignore digital transformation
The impact of location on the property price, the complicated legal procedures and the lack of transparency in the constructional and operational process are three factors that slowing down the digital transformation in the real estate and construction industry in Vietnam, according to Mr Chu Quang Thai – Digital asset project development specialist, South office of the National Startup Support Center – Ministry of Science and Technology.
The experts in the Ministry of Science and Technology at a real estate project.
As the digital revolution brings sweeping change across nearly every industry, the real estate and construction industry has been slow to move with the times, until now. This comes from the industry’s peculiarity.
Mr Thai argues that home buyers want to visit the property physically and view a property in-person before making a purchase decision. Because this is a high-value asset, buyers are hesitant to buy a home sight unseen, with virtual home tours and long-distance purchase.
And the legal procedure is too complicated with many consequences. Legal paper and records alone in the field of construction and real estate account for 25-30% of the investment cost. Mr. Thai said some projects were worth about 8 billion VND but needed a vehicle to carry its documents. Each construction bid has up to 100 signatures. It can take a month to get the signature again, if there is an error.
In addition, lack of process transparency in construction projects and operation management requires improvement. Traditional operating process revealed many weaknesses that can only be realized when applying digital technology. For many businesses, it is a big challenge to improve the process, but they cannot ignore this stage, said Mr. Thai. It is necessary to set up the new process before digitizing. This not only saves management costs, but also digitally monitors a project from building to maintaining stage on time and on budget.
The industry needs digital transformation not only for sale but also for the connection among the supply chain.
Diverse needs are address in the industry to connect B2B cross-border and more complex, according to Mr. Thai: “How can a person in Hanoi build villas or resorts in Ca Mau and Phu Quoc? Sometimes they have to let it go if they want to manage the project and optimize costs without digital tools.” He believes that sooner, technology can connect people cross-border so that US developers can hire contractors in Hanoi to build houses in Phu Quoc designed by French architects and Singaporean supervisors.
According to Mr. Truong Thanh – founder and CEO of XIXO ecosystem – the industry needs a common platform to connect many components in the construction and real estate ecosystem.
It can be between the construction team and the contractor – between the procurement, the production, the supplier, the consulting firm and the developer or the industrial construction company – or between selling and buying people. Thereby, all components of the ecosystem can connect, transact and deliver value through smart contracts.
Mr. Thanh believes that blockchain technology will provide a transparency ecosystem for construction, real estate and industry activities when launching digital transformation. This technology ensures security and convenience when performing O2O (online to offline) transactions. Customers only need to have an idea and budget, the rest will be done by technology.
Blockchain helps to create payment protocols for each process from designing, selecting materials and hiring custodians after the smart contract is signed. Previously, developers in Hanoi wanted to build a house in Phu Quoc, and had to make hundreds of phone calls to exchange ideas. Then they have to leave it to the contractor. Currently, technology has helped them to select, search for contractors, construction materials, design, construction… and receive daily reports on computers.
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